Ben Bernanke Speaks and Emerging Markets Taking a Hit

Since the crash of 2008 emerging markets have seen enormous amounts of capital inflows. As you can see with volume on this chart money has poored into a very popular Emerging Market ETF, EEM. If you look closely, after significant corrections emerging markets are leading US markets. So look for EEM to push out of this recent correction at a higher rate of return compared to the S&P, DJIA and Nasdaq.

What the chart is telling us with this volume and Fibonacci study, emerging markets have capitulated in the near term. On balance volume OBV is near the 2011 US market/Emerging market bottom. Chaiken Money Flow as well as the Elder Force Index, both volume indicators, are suggesting capitulation as well. If I were to use CMF and EFI, I would wait to see both cross the 0 median line before getting bullish.

Another new indicator is the volume weighted-adjusted moving average VWMA. The Volume Weighted Moving Average is a weighted moving average that uses the volume as the weighting factor, so that higher volume days have more weight. It is a non-cumulative moving average, in that only data within the time period is used in the calculation. When the VWMA is distant from the actual price, it suggest capitulation. On weekly the VWMA is at 42.07 while price barely stands on a recent fib line at 38.61.

Looking at price action we can see we have made higher highs and lower lows since the 2011 drop. With the larger fib line (shown on the thumbnail image, not here} we might want to look at is the .382 retrace at 37.90 for support and 37.21 for further support/possible weekly tweezer bottom in the near term.